Brussels-based Bureau of International Recycling (BIR) Nonferrous Metals Division President David Chiao of Uni-All Group Ltd., Atlanta, said the primary issues affecting nonferrous scrap companies are the U.S.-China trade war, global political instability and a widespread decline in manufacturing, with some countries’ automotive industries recording 10 percent declines in production. Additionally, he said, scrap metal flows have been “transformed” by factors that include changing environmental policies.

Chiao addressed the BIR Nonferrous Metals Division during the 2019 World Recycling Convention Round-Table Session, which took place in Budapest, Hungary, Oct. 14-15.

Guest speaker Perrine Faye, global base metals editor at London-based Fastmarkets, argued that these shifts in scrap flows are far from temporary. “A number of investments have been made, and so a certain amount of permanent change has occurred, particularly on the copper side,” she said during a panel debate moderated by Natallia Zholud of the Belarus-based TRM Group.

“There is no way back,” agreed Murat Bayram of U.K.-based European Metal Recycling Ltd. (EMR) agreed. “We have seen huge investments in the Western world. We need to fasten our seatbelts. Quality, service and reliability are the most important things to focus on to help our industry overcome the turbulence.”

Chiao urged everyone in the scrap industry to show “environmental consciousness” in regard to the quality of the material they ship, while Divisional Senior Vice President Dhawal Shah of Metco Marketing (India) Pvt. Ltd., Mumbai, India, underlined that the recycling industry’s primary responsibility must be to buy and sell “good, clean scrap.” He also acknowledged the huge potential for increased scrap consumption within India.

Faye insisted that Chinese demand for copper scrap remains “robust” with alternatives such as blister, concentrates and cathodes being expensive.

She also highlighted a “very, very strong correlation between copper scrap discounts and the LME (London Metal Exchange) price” despite occasional disconnects.

Faye also spoke of a manifest downtrend in aluminum scrap prices, particularly among the less pure grades, and of an uncertain future for secondary aluminum prices owing to the growing adoption of hybrid cars and the move away from diesel engines.

She predicted that LME aluminum prices are likely to remain below $18,00 per metric ton in 2020 but also indicated that the market is “near the bottom.”

Andriy Putilov, chairman of the board at MZ Ltd. in Ukraine, who was also a guest speaker, highlighted his country’s changing approach to exports of nonferrous scrap—from a ban in 1999 and a 30 percent duty in 2008 to today, where the export duty to EU countries is 7 percent, while it is 15 percent to other countries.

He also alluded to more promising prospects for Ukraine’s secondary aluminum industry through the creation of joint ventures and parliamentary moves toward achieving more favorable conditions for the recycling industry. Since 2017, he noted, no EU import duty has been assessed on secondary aluminum alloys from Ukraine.

Viktor Kovshevny of the Russian recycling association Ruslom, Moscow, addressed the Ferrous Division during the Bureau of International Recycling (BIR) World Recycling Convention Round-Table Sessions in Budapest, Hungary, Oct. 14-15. According to a news release from the BIR, he reviewed recent moves in Russia toward scrap export restrictions. Having imposed quotas for the final four months of 2019, the Russian government also is proposing that all export sales be listed on a metal exchange platform starting April 1, 2020, for greater transparency, he said. The main problems with such an exchange, Kovshevny added, are that “scrap is bought, not sold” and that commercial confidentiality would be destroyed with such a system.

He also said delays in the quota licensing process caused a suspension of exports that cost the scrap industry “hundreds of millions of U.S. dollars.”

Having underlined that problems with trade restrictions are not limited to Russia, Kovshevny urged investors worldwide to stop putting money into businesses that restrict the free trade of recycled materials and put obstacles in the way of sustainability.

“I think we can agree that there is no place for quotas, tariffs and bans in the scrap industry,” Greg Schnitzer of Portland, Oregon-based Schnitzer Steel Industries Inc. and BIR Ferrous Division president said in response to Kovshevny’s presentation.

In a guest presentation focusing on steel industry oversupply, Becky E. Hites of Steel-Insights LLC, Atlanta, highlighted the steep surge in China’s scrap-intensive electric arc furnace (EAF) steel production from less than 80 million metric tons in 2017 to more than 120 million metric tons in 2018. She estimated a further increase of almost 22 percent by the year 2022 to 142.6 million metric tons of EAF production.

Hisatoshi Kojo of Metz Corp., Tokyo, said that while Japan’s domestic demand for steel is expected to remain relatively stable, exports are expected to decline owing to weaker demand from China, for example.

On the issue of Brexit, Shane Mellor of Mellor Metals Ltd. in the U.K. expressed concern about its potential to hinder trade but remained confident that “the market will always sort itself out” and that the U.K. will continue to maintain a strong trading relationship with the rest of Europe.

In his update of the 10th edition of “World Steel Recycling in Figures,” Brussels-based BIR Statistics Advisor Rolf Willeke noted a further 20.7 percent leap in China’s steel scrap usage for crude steel production, having grown from 85.57 million metric tons in the January to June 2018 period to 103.28 million metric tons in this year’s corresponding period. This growth “reinforces China’s position as the world’s largest steel scrap user,” he added.

Willeke ascribed this steep increase to the higher pollutant emission standards set for China’s steel industry and, as a consequence, a hike in most basic oxygen furnace (BOF) mills’ scrap inputs to an average of 20.2 percent, the further increase in China’s EAF production and a 9.9 percent year-on-year surge in China’s total crude steel production when comparing the first six months of 2019 with the same period in 2018.

Although Turkey remained the world’s top importer of ferrous scrap, the first half of 2019 brought a 16.4 percent year-on-year decline in the country’s overseas steel scrap purchases to 9 million metric tons, Willeke said.

He added that the EU-28 remained the world’s leading steel scrap exporter, boosting its outbound shipments in the first six months of 2019 by 3.1 percent to 11.02 million metric tons.

The town of Freetown, Massachusetts, has been ordered to reinstate the license of Excel Recycling LLC, headquartered in Freetown, according to a ruling by Judge Raffi N. Yessayan on Oct. 3 in the New Bedford Superior Court. The decision came after a long and expensive battle between the town and Excel Recycling, in which the town of Freetown was ruled to have acted in an arbitrary and capricious manner as Excel sought to establish its right to a license to operate its scrap metal processing plant in Freetown’s Campanelli Industrial Park.

“We are pleased that the judge recognized Excel’s significant efforts and its attempt to build a positive relationship with the town of Freetown and the community,” says Marty Costa, president of Excel Recycling. “From the beginning, Excel has wanted to be a contributing member of the community by providing an important service and by creating many jobs.”

Excel’s latest legal dispute with the town of Freetown began after the board of selectmen last year reversed its 2015 decision to allow the company to operate in the town’s industrial park, denying its license renewal on Dec. 5, 2018, in response to complaints from residents about sound and emissions generated by the company’s metal processing operations.

According to a news release from Excel Recycling, the board of selectmen’s decision not to renew Excel’s license jeopardized employment opportunities and commerce to the community. Excel started building its facility in the industrial park in 2015 after obtaining approval from the Freetown select board and building commissioner, who confirmed that the company’s operations were an “as of right” use in the industrial park after the Massachusetts Department of Environmental Protection (DEP) permitted a state of the art metal shredder and associated metal separating equipment. With all permits in place, Excel began its operations.

After receiving initial complaints from a small group of neighbors, the company engaged civil engineers and sound engineering experts who submitted a noise mitigation plan to the town and the DEP. Excel Recycling reports that it spent more than $2 million to address the sound issues, including but not limited to the installation of a state-of-the-art German-engineered sound enclosure. After the installation of the acoustic enclosure, noise levels were tested by Excel’s engineers under the supervision of DEP, and air-quality testing was completed under DEP supervision. Results demonstrated that Excel was operating in compliance with the required noise levels at all of the nearby residences and that air emissions from its operations are within air-quality regulations, the company reports in a news release.

The site’s engineered stormwater system, which is subject to a long-term stormwater pollution prevention plan, was inspected and found to be operating according to its design. Also, even though Excel Recycling had scientific evidence that it has been compliant with DEP noise and emissions requirements and police logs show that a number of reported complaints about noise emanating from the facility were unfounded, the company has taken additional steps to appease abutters and the town of Freetown, Excel Recycling reports in a news release. The company also installed liners in truck beds to reduce noise and initiated best management practices, further mitigating sound from the operation.

Prior to receiving the favorable ruling, on two occasions Excel Recycling offered to enter into a Host Community Agreement with the town of Freetown, which would have resulted in Excel Recycling paying the town up to $175,000 annually in addition to its annual property tax. According to Excel Recycling, that offer was rejected by the select board last August without any explanation or counter proposal.

At the Oct. 3 Superior Court Hearing, Excel Recycling argued that when the Freetown board of selectmen denied Excel’s license, it ignored the scientific documentation showing Excel Recycling’s compliance. The court accepted the argument, noting that the town had not conducted any scientific testing of its own and had no valid evidence to refute Excel Recycling’s compliance.

A family-owned company, Excel Recycling was founded in 2003 and currently owns three facilities serving Massachusetts, Rhode Island and Connecticut, as well as parts of New Hampshire and Maine.

Despite the multiple challenges in the recycling industry, there are also many reasons to be optimistic about its prospects. This was the overarching conclusion drawn by contributors to a debate on global trade which kicked off Brussels-based Bureau of International Recycling’s (BIR’s) World Recycling Convention, held at the Budapest Marriott Hotel from Oct. 14-15.

During a spotlight discussion on global trade, session moderator Michael Lion of Everwell Resources Ltd., Hong Kong, pointed to the destabilizing impact of China’s new scrap import controls, the continuing uncertainty surrounding Brexit, worrying developments in Turkey and damaging trade disputes. He insisted that the resulting volatility can offer traders “more opportunities than in a level-playing-field market.”

Lion highlighted the “misrepresentation” of the recycling industry in the wider media narrative, despite its “immense” environmental, economic and social contributions. Lion said, “There is no question about our story being the right story. We need to get across that we are the solution.”

Murat Bayram of U.K.-based European Metal Recycling Ltd. urged politicians to recognize the climate protection contribution of the recycling industry, suggesting that they should consider “incentives for companies using scrap.” Also, Greg Schnitzer of Portland, Oregon-based Schnitzer Steel Industries Inc. said the trading environment would be much improved by the removal of tariffs and quotas.

Doug Kramer of Los Angeles-based Spectrum Alloys LLC called for the word “waste” to be taken out of the debate surrounding the industry because “we are not in the waste business.” Robin Wiener, president of Washington-based Institute of Scrap Recycling Industries (ISRI), urged the sector to talk more about “all the positives” achieved through recycling and about what it means to be “a responsible recycler.”

According to BIR President Tom Bird, the recycling industry is going to be “even more needed” in the future but is currently facing “many world issues over which we have no control, and that’s always a concern.” Bird called on the industry to respond by being “nimble and proactive.”

Insisting that the recycling industry has entered a period of “great opportunity for those who think strategically,” Graeme Cameron of Rye, New York-based Sims Metal Management welcomed the proposal from Bird that, under his presidency, BIR will be looking to develop its statistical database to support the recycling industry’s claims of its vast environmental contribution.

On the issue of shifting demand patterns, David Chiao of Uni-All Group Ltd., Atlanta, said, “China may be out of the market but not out of the equation.” Chiao urged recyclers not to underestimate the wider positive impact of China’s Belt and Road Initiative.

Guest speaker Philippe Chalmin, author of the long-running Cyclope Report into product/trade cycles and trends, offered delegates a mixed forecast for late 2019 and early 2020. While anticipating no recession and a strong dollar in the United States as well as a “soft landing” for the Chinese economy, he warned of “hard times” in the EU and of an impossibly confused outlook for the U.K.

With the notable exceptions of gold, palladium and nickel, he described nearly all other commodity markets as “gloomy” amid weak demand and strong supply. However, he also suggested that most of the metals “have reached more or less a bottom level.”

During the Bureau of International Recycling’s (BIR’s) World Recycling Convention Oct. 13-15 in Budapest, Hungary, delegates debated the outlook for Europe’s recovered fiber surplus. Delegates of Brussels-based BIR’s Paper Division indicated that Turkey could provide a home for a significant proportion of Europe’s recovered fiber surplus over the next three to four years.

By the year 2023, Turkish paper mills are expected to have developed a combined annual production capacity of between 6 million and 7 million metric tons, BIR reports. However, the country’s collection rate of about 40 percent is well below that achieved by many developed countries and is not increasing, according to Ercan Yürekli from TÜDAM, the national association of Turkish paper and plastic recyclers and collectors. As a result, there will be a need for annual imports into Turkey of perhaps 2 million to 3 million metric tons of recovered fiber, meaning that the country could provide “a solution for some of Europe’s surplus,” he said during the event.

Under current waste management regulations in Turkey, only recyclers are allowed to import recovered paper whereas collection companies cannot. The country’s imports have soared from just over 300,000 metric tons in 2015 to more than 725,000 metric tons in 2018, with a figure nearer 1 million metric tons anticipated for 2019.

Martin Leander, vice president of Stena Metal International AB, reported in the session that new capacity is also emerging in Sweden. At the same time, the insulation and hygiene sectors have been testing wider use of recovered fiber in their products.

Earlier in the BIR Paper Division’s meeting, the body’s General Delegate Sébastien Ricard of France-based Paprec explained that Europe’s structural surplus of recovered fiber is currently approaching 8 million metric tons per year, with annual collections of 56.7 million metric tons exceeding consumption of 48.8 million metric tons. “So, we need exports in Europe,” he stated in the session. “We need new markets.”

Until recently, China’s demand for European fiber had represented the market’s balancing factor. However, the recent shift in Chinese policy has resulted in a steep decline in its overall fiber imports—from around 28 million metric tons in 2017 to about 5 million metric tons in 2020, according to Yürekli. To make matters more difficult for Europe’s exporters, most of China’s recovered paper quotas have been used to purchase from the United States instead, Ricard adds.

With few opportunities to sell into China, Ricard said prices in Europe have “collapsed” and the price for cardboard, or old corrugated containers (OCC), is currently around the low recorded in August 2009. Mills have taken advantage of the steep drops in fiber prices by becoming “more and more demanding on quality,” Ricard stated.

BIR Paper Division President Martin Soth of Pieringer Abfall Verwertung GmbH in Austria pointed to falling prices in Eastern Europe and problems with deliveries because Western companies have been keeping the region’s mills well supplied—something which did not happen, he added, when China was more active in the market.

Supported by factors such as continuing growth in online shopping, cardboard prices may well increase at some point in the future “but with a premium on quality,” Ricard concluded.